Chicago cabbies say industry is teetering toward collapse

CHICAGO — Operators of the nation’s second-biggest taxi
fleet are now accelerating toward their long-rumored extinction, edging towards
becoming virtual dinosaurs in the era of ride-sharing monsters Uber and Lyft.

Cabbies have long grumbled that the sky is falling as
they lose ground to ride-sharing companies. Now, cabbies in Chicago are
pointing to new data that suggests the decline could be speeding up.

About 42% of Chicago’s taxi fleet was not operating in
the month of March, and cabbies have seen their revenue slide for their
long-beleaguered industry by nearly 40% over the last three years as riders are
increasingly ditching cabs for ride-hailing apps Uber, Lyft and Via, according
to a study released Monday by the Chicago cab drivers union.

More than 2,900 of Chicago’s nearly 7,000 licensed taxis
were inactive in March 2017 — meaning they had not picked up a fare in a month,
according to the Cab Drivers United/AFSCME Local 2500 report. The average
monthly income per active medallion — the permit that gives cabbies the
exclusive right to pick up passengers who hail them on the street — has dipped
from $5,276 in January 2014 to $3,206 this year.

The number of riders in Chicago hailing cabs has also
plummeted during that same period from 2.3 million monthly riders to about 1.1
million.

Declining ridership for Chicago’s taxi industry comes as
foreclosures are piling up for taxi medallion owners who aren’t generating
enough fares to keep up with their loan payments and meet their expenses.

More than 350 foreclosure notices or foreclosure lawsuits
have been initiated against medallion owners already this year, compared to 266
last year and 59 in 2015. Since October, lenders have filed lawsuits against at
least 107 medallion owners who have fallen behind on loan payments, according
to the union’s count.

The union is calling on the city take several actions to
provide relief for the city’s struggling taxi industry, including changing
rules so taxi drivers aren’t required to replace their vehicles as often, waive
an annual $1,176 per taxi ground transportation tax fee, and eliminating a city
medallion license renewal fee that costs owners $1,000 every two years.

“When they opened up ground transportation and taxi
market to thousands of for-hire vehicles like Uber, Lyft and now Via . . . taxi
driver income has been decimated and owner-operators are unable to keep up with
loan payments for their medallions plus their high-operating costs,” said
Tracey Abman, associate director at AFSCME. “As a result of that, hundreds of
taxi owner-operators are facing foreclosures on their medallions and thousands
more foreclosures are likely unless the city takes substantial action to reduce
the financial burden on small taxi owners.”

Chicago cabbies aren’t alone in feeling the pinch.

In New York, ridership in the city’s iconic yellow cabs
has fallen about 30% over the last three years. Last year, San Francisco’s
Yellow Cab — the city’s largest taxi company — filed for Chapter 11 bankruptcy
protection. Los Angeles taxi ridership fell 43%, and revenue was down 24%,
between 2013 and 2016.

Chicago's Department of Business Affairs and Consumer
Protection said in a statement that it is prepared to continue talks with cab
owners and operators on ways to reduce the regulations on the industry. But the
city agency noted that it also has already taken a series of actions to try to
help the bottom lines of owners and operators, including hiking taxi fares by
15%, reducing credit card transaction fees on rides, and reducing the medallion
transfer tax by 80%.

“Transportation companies compete for customers, and
ultimately it is the consumer who makes the choice,” the city agency said.

The value of Chicago medallions hit a median sales peak
of $357,000 in late 2013, just before Uber arrived on the scene in Chicago. In
April, one medallion sold for just $35,000, according to city data.

About 39% of Chicago’s medallions are owned by individuals
or groups with four or few fewer medallions, while the majority of medallions
are owned by companies that maintain large fleets of taxis and lease the
permits and vehicles to licensed operators.

Veteran Chicago cabbie John Aikins, 67, who is facing foreclosure
on two medallions for which he owes more than $330,0000, said he has little
hope that the industry can be saved.

"It feels like the city is just watching us
collapse," Aikins said. "Right now, there are a few people, the
elderly and some others who refuse to take Uber because they are uncomfortable
with it, that keep us going. But how many of those people are out there to
sustain us?"

Taxi operators have long complained since the emergence
of Uber that they face an uneven playing field with the ride-share companies,
which don’t typically face the same permitting and fee rules. The Illinois
Transportation Trade Association of Illinois unsuccessfully sued the city of
Chicago, arguing that Chicago had unconstitutionally enforced two sets of rules
for taxi and ride-sharing industries and made it impossible for cabbies to
compete with Uber and Lyft.

But the U.S. 7th Circuit Court of Appeals ultimately
rejected the taxi industry’s argument. Cabs and ride-hailing, the court ruled
last October, are distinct services and could thus be regulated differently. In
April, the Supreme Court declined to hear the case and the 7th Circuit’s
finding stood.

"Were the old deemed to have a constitutional right
to preclude the entry of the new into the markets of the old, economic progress
might grind to a halt," Judge Richard Posner wrote in the 7th Circuit
decision. "Instead of taxis we might have horse and buggies; instead of
the telephone, the telegraph; instead of computers, slide rules."

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